CES Energy Solutions Corp

TSX:CEU

Earnings Call Transcript 2021-Q1

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the CES Energy Solutions Corporation First Quarter 2021 Conference Call.As a reminder, all participants are in a listen-only mode and the conference is being recorded. [Operator Instructions]I would now like to turn the conference over to Tony Aulicino, Chief Financial Officer. Please go ahead.

[Anthony Michael Aulicino, Chief Financial Officer]

Thank you, operator. Good morning everyone and thank you for attending today's call.I'd like to note that in our commentary today, there will be forward-looking financial information and that our actual results may differ materially from the expected results due to various risk factors and assumptions. These risk factors and assumptions are summarized in our first quarter MD&A and press release dated May 12, 2021 and in our annual information form dated March 11, 2021.In addition, certain financial measures that we will refer to today are not recognized under current general accepted accounting policies and for a description and definition of these, please, your fourth quarter MD&A.At this time, I'd like to turn it over to Tom Simons, our President and CEO.

[Thomas J. Simons, President, CEO & Director]

Thanks, Tony. Good morning, everyone. It's a real pleasure to hold today's call. Fr the first time since the pandemic began, industry finds itself feeling guarded optimism. From my seat as a Canadian running a North American-wide company, it appears the survivors and upstream across North America have all quickly learned to operate within cash flow. Thanks to bad public policy from Ottawa, Canadian E&Ps learn this long ago. Now our U.S. brethren have also adopted.CES is thriving in this new oil field. Revenue, margins, EBITDA were all up quarter-over-quarter. On today's call, I'll provide the customary operations update. I'll remind listeners of our overarching strategy as a company that supplies chemistry to industry. Tony and I will both discuss capital allocation. And this time, I'll try not to interrupt them.I'll talk about organic growth objectives and how we believe we can create permanent value for long-term investors. Tony will give a very detailed financial update, we'll take questions together, and then I'll provide a summary and then wrap up today's call.I'll start with Canada. Our mud or drilling fluid business continues its dominance of the Canadian market. We enjoy great market share in the quarter, 35% to 40%, which is really a 10-year plus story now unlike a lot of less fortunate OFS companies, our focus of solving customers' problems through applications of chemistry has allowed us to be nimble and to adapt to change our better than equipment providers. We help oil sands [indiscernible] customers drill and weak release on AFE or budget and leave it cased well that production can count on. So we don't wash out the whole allowing wellbore communication. We run appropriate fluids on the build section to reduce risks of surface leaks or issues and we do so with recycled waters. For deep plays like the Montney and Duvernay, we provide AI assisted research to properly plan fluids for each interval of the well.The shared objective of CF, [ CESM ] customer always to drill in case on AFE budget while giving completions of well, that can be reliably produce or fracked and then produced now or much later so. Again we do this with changing applications of chemistry and often recycled waters and fluids. Our scale and vertical integration of our products, allows our internal supply chain to meet our customers' needs better than our competitors based upon margins and working capital comparisons. It helps to have 15 years of continuous leadership in Canada by Ken Zinger and his team.Our technical sales and ops team supply chain, safety and back-end work hand in glove to the benefit of our customers and shareholders. I'd like to personally thank that group for continuing to deliver, as this is my personal beginning in background. I'm really proud of you guys. I understand how tough this business is.PureChem our Canadian production chemical business continues its steady performance. We continue to expand in all the right places. Oil sands and deeper horizontals that get fracked is just technical and the customer can't risk hiring vendors or suppliers on these types of wells or production that never let them down. Our people get and keep the work while our Grand Prairie facility is helping drive our margins as do our manufacturing and supply chain.As our volumes increase in the oil sands, we may look to expand our throughput in our Nisku facility to support growth sort of refresh memories. We produced H2S scavengers in a plant in Nisku. We already manufacture these products. This will allow us to increase throughput our production to meet growing demand always a great thing.Our frac team and PureChem is getting some good winds which create nice contribution margin over our fixed costs. This work is very cyclical as most people know, but it's in our wheelhouse that can happen off of our already existing footprint that supplies drilling fluids and production chemicals to the same warehouses and yards, same labs and scientists, same supply chain with another sales outlook that adds operating leverage. We've beefed up that team, which bode well for this pending activity run by our customers.PureChem has a great future and is on track for a fine 2021. Our niche businesses in Canada StimWrx, Sialco and Clear, all continue to deliver in their own way. StimWrx has continued good performance in Canada and has made great strides entering the U.S. markets. To remind people, we reentered tired-old wells and after careful analysis treat them with specialized acid blends including nano technology which turns those tired wells that are becoming liabilities back into cash flow generators for our customers. Low CapEx, high touch engineering evaluation to treat the correct wells with the right products at the right dosages. We like this niche business a lot.Sialco is our reaction chemistry business in Vancouver. it continues to support internal supply chain and technology development while offering us some diversification with revenue into non-energy markets. Clear Environmental continues to keep its nose above water in a very competitive market in Canada, increased activity and the absence of terrible pricing from competitors would be nice. So we aren't betting on those things happening. Gavin Grimson and his team continue to look for innovation that we can capitalize on as a company with scale and science knowhow.To conclude on Canada as Canada gets closer to increased tidewater takeaway for oil through Trans Mountain expansion and LNG on the West Coast. With today's commodity prices, 2021 looks to be a solid year for CES in Canada.I'll now move on to the U.S. AES is shooting out the lights, we've moved from 13% market share 18 months ago to 20% plus and not by using our balance sheet, which has been the customary trick deployed by the very large integrated OFS companies in oil crashes. We've done that by focusing on our people and equipping them to solve our customers' problems better than our competitors. We've made previous investments in the right places.In the Permian with the Corpus Christi barite mill with the Kansas play plant. Those things have enabled us to build a lot of positive momentum. Our customer mix is expanding and our upside is high and we like our chances in the new era for U.S. producers where they work within cash flow while lowering their environmental footprint. Operators were award relationships of trust if we deliver better results than our competitors and we do. That's why we've become the leading drilling fluid company in the U.S.I had the privilege to participate with our bright young engineers and scientists just last week at a Technology Summit in Texas, led by Richard Baxter, our AES President. As a 25 year plus drilling guide. I can assure that listeners and customers AES will continue to help producers drill wells on budget and ideally while lowering their carbon footprint, that's the goal and how we will hold or increase our position within the market. So stay tuned for 2021 and beyond. It looks good for AES with these commodity prices and the team we have in place.Jacam Catalyst is our production chemical business in the U.S. led by Vern Disney. We've now fully integrated 2 businesses to the benefit of our customers, employees and shareholders. This allows best-in-class problem solving using case studies from across all basins in the U.S. or even in Canada as appropriate. Our blending, lab, office and staging facility in Midland has grown from 7 acres only 5 years ago to 30 acres today. U.S. market has stabilized at approximately 11 million barrels of oil a day. We've enjoyed solid results from Jacam Catalyst. As new production to offset declines comes from horizontal wells, our volumes and complexity of application of chemistry goes up while the use of CapEx heavy treater trucks goes down. These wells are continuous injection of production chemicals.We've also made modest geographic expansion to the Gulf of Mexico with no outlay of CapEx. Jacam Catalyst really helped carry the ball for CES through 2020 and 2021 looks to be shaping up to be another fine year. I'll now refresh the listeners on our overarching strategy and top capital allocation before turning it over to Tony.Our business strategy is to utilize specialized sales lines led by working managers in a decentralized capacity. We manufacture supply and apply chemistries and minerals, so minerals being primarily barite and calcium carbonate to energy producers and midstream companies. We can create significant operating leverage by selling drilling fluids, production chemicals, fracturing chemistry, stimulation chemistry, pipeline tank chemistry off a common platform of manufacturing, yards and warehouses, labs and scientists, a common back-end for the business.Future CapEx is maintaining or expanding our fleet of rolling stock or trucks and increasing throughput as appropriate in already existing facilities such as Nisku. We can support double our current run rate with our existing platform before significant CapEx would be required in our main manufacturing facility, our 80-acre reaction chemistry plant in sterling Kansas, a world-class facility supported by rail and truck.On capital allocation, our objectives remain steadfast, which were all underpinned by our ability to generate true free cash flow. Our goal is to reduce the share count, which we did in a meaningful way in Q1. We look to substantially reduce the bond when we refinance it. We won't be paying over par forward in the market, though I can't assure people of that as we're looking to pick it up in the open market that will free up a nice amount of cash for equity holders.As we move through those 2 objectives and feel the pandemic is settled and energy markets are stable, we'll look to resume returning money to shareholders. That has been our hallmark since IPO of our private business in 2006, make money, share it with equity holders.By staying focused on our leading North American land position and drilling fluids, growing our #3 position in production chemicals and getting valuable contributions from our niche businesses by being obsessed with working capital ratios, getting paid on our AR by working for strong customers by focusing on our people, we can keep creating permanent value for listeners on this call. We continue to pursue new technologies and geographic expansion as those unfold and deliver financial results, we will update people accordingly.I'll now turn it over to Tony.

[Anthony Michael Aulicino, Chief Financial Officer]

Thanks, Thomas. CES' first quarter results continued our streak of strong sequential improvements in revenue, EBITDAC margins and cash flow generation. During the quarter, we also stayed focused on working capital optimization and preservation of strong balance sheet and liquidity metrics. CES generated revenue of $261 million and EBITDAC of $34.4 million representing a 13.2% margin and a significant improvement from the 11.6% last quarter, while generating very strong funds from operations of $27.4 million for the quarter.Throughout Q1, we have benefited from further strengthening in demand for oil and gas, improving customer economics and stabilizing industry sentiment bolstered by COVID-19 vaccine deployment. CES has been able to leverage its established infrastructure and strong industry positioning to capitalize on these positive developments as demonstrated by significant sequential improvements in financial results despite temporary lost revenues and supply chain disruptions related to winter storm, Uri.As activity levels continue to improve in the quarter, CES invest in working capital and remain disciplined on capital expenditures, while retaining substantial liquidity and balance sheet strength. We exited the quarter with a net draw on our senior facility of $4 million compared to a net cash balance of $18 million at the end of 2020. The increase was driven primarily by investments in working capital on higher activity levels across business lines and by the repurchase of 6.3 million shares for $9.5 million at an average price of $1.50 per share.Since March 31, industry activity has continued to improve in both production chemical and drilling fluids end markets, prompting modest investments in working capital, offset by strong collections and as of today, the net on our senior facility is $5 million.CES' Q1 revenue of $261 million represented a sequential increase of $48 million or 22% from Q4 2020. Revenue generated in the U.S. was $168 million or 64% of total revenue for the company. U.S. revenues were impacted temporarily by lower activity levels and lost revenues resulting from winter storm Uri during February and while activity levels were down from comparative Q1 2020 period, we participated in an improved drilling environment on a sequential basis and we're able to increase U.S. drilling fluids market share to another new record of 22% in the quarter.Likewise in Canada with revenue of $93 million in the quarter, both the production chemicals and drilling fluids businesses participated in improving drilling activity levels and the reversal of temporary shut-ins on a sequential basis while experiencing year-over-year declines in activity levels from pre-pandemic levels. CES achieved adjusted EBITDAC of $34.4 million in Q1 compared to $24.7 million in Q4 and $51.1 million a year ago in Q1 2020. Included in these results for the quarter is a $1.7 million benefit recognized by CES from the Federal Government's Canada Emergency Wage Subsidy program, which has been instrumental in allowing CES to mitigate further Canadian personnel reductions throughout the downturn.Adjusted EBITDAC as a percentage of revenue in the quarter was 13.2% representing a significant improvement from the 11.6% recorded in Q4 2020 as the company benefited from improved competitive positioning, the reversal of certain production shut-ins in both the U.S. and Canada, improved drilling activity, increased market share and modest improvements in pricing.CES has continued to maintain a prudent approach to capital spending through the quarter with net spending of $3 million. We will continue to adjust plans as required to support growth throughout divisions as industry conditions continue to unfold. For 2021, we continue to expect capital expenditures to be up to $30 million of which $10 million is paid for expansion and $20 million approximately for maintenance CapEx.Our balance sheet continues to benefit from prudent structuring and maturity schedules of our credit facility and notes. We ended Q1 with $320 million in total debt comprised primarily of $288 million in senior notes, which don't mature until October 21, 2024. At March 31, we had a net draw of $4.1 million, on our senior credit facility with a maximum available drive approximately $235 million CAD equivalent, providing us with ample liquidity.Throughout the pandemic, we benefited greatly from the high quality of our customers and diligent internal credit monitoring processes. We have continued to maintain a strong collection record, minimizing accounts receivable losses and did not record any credit-loss provisions in Q1 2021. We continue to remain diligent and focused on strong AR collections, minimal bad debt expense, inventory management and strong credit metrics. These merits of our balance sheet, liquidity and CapEx light cash flow generating business model. We also recently recognized by S&P and DBRS credit rating agencies through upgrades to B stable and B high stable respectively.We remain responsibly cautious on our outlook for the remainder of 2021 and beyond. CES continues to believe that coming out of the downturn, it can continue to grow its share of the oilfield consumable chemicals markets in which it competes. Our underlying business model is CapEx light and asset light enabling generation of significant surplus free cash flow.We will continue to assess share buybacks and bond repurchases in the context of our assessment of market conditions, market prices and certainty around our surplus free cash flow levels. As our customers increasingly regulate their business models to maintain spending within cash flows, we believe that CES will be able to leverage its established infrastructure, business model and nimble customer oriented culture to deliver strong financial performance.Operator, at this point, I'd like to turn it back over to you to allow us to take questions from the audience.

[Operator]

[Operator Instructions] Our first question comes from Aaron MacNeil from TD Securities.

[Aaron MacNeil, Equity Research Analyst]

You've obviously had some nice success growing the rig count in the U.S. through market share gains, but assuming at absent future market share capture, how of the discussions with your customers about since the last conference call. Obviously another quarter end and then have another round pledges from public companies that they're going to remain disciplined. But is that consistent with what they're telling you.

[Thomas J. Simons, President, CEO & Director]

Sorry, Aaron, would you repeat the last part of that is it. Are you asking if they're signaling the same thing to us as investors. Did I hear that right?

[Aaron MacNeil, Equity Research Analyst]

Yes, you got it.

[Thomas J. Simons, President, CEO & Director]

Yes. We track the transcripts and disclosure of our biggest customers and then our account managers watch their own customers where maybe Tony and I or Gary aren't catching all that stuff. I think it's more than the pledge. I think that's what call it the analyst community has dubbed it, but my observation is these companies are adjusting quickly to create equity value for their shareholders so that we are left with the 7 sisters, some standard oil in 10 years and so they've pivoted to spending 65% to 70% of cash flow and then putting the balance back into share buybacks and dividends. We saw our biggest customer adjust their tone on their call just last week and I think that went over well. So I think it more that self-preservation, Aaron. We do have a good amount of work in the U.S. with privates that are bound by the same call it, cash flow restraints. They got cached up with investors outside of kind of the constraints of the capital market and those guys are running their businesses to build and be purchased like what happened with Double Eagle 3 and it worked. So my view is that shell oil in the U.S. is not going to flood the market and drive oil prices down and the unintended consequence of the COVID-induced oil collapse, but natural gas has become economic. The Double Eagle guys were paying their overhead with the gas. A year ago, they probably want it to flare it. So we see all sorts of positives and we don't see our customers needing to outspend cash flow and they know not to, because they can't access capital in the equity market. So my long answer is, I think that human nature is going to rule the day and these companies are going to run to survive and that's what investors want from them and if they want to call it a pledge. Great. But I don't think the money is there to flood the market because they can't tap out excess cash flow for 20 years up until what 2015 upstream outspend cash flow by 30% for 20 years. If we understand it by 30% that seems pretty bullish for commodities to this guy.

[Aaron MacNeil, Equity Research Analyst]

Fair enough. Tony, you also touched on this a bit in your prepared remarks, but can you maybe walk us through the composition of treatment points in more detail. So I'm just making up the numbers here, but let's say half year treatment points or verticals this time last year. What would that number be with Q1, and then maybe on the to think about it differently on a same-store sales kind of basis, how might average revenue per well it changed over the last 12 months.

[Anthony Michael Aulicino, Chief Financial Officer]

Not playing positive Aaron, I really don't know the answer to exactly verticals to horizontals. If we can break that out and share it, we would do it with everyone. What I can tell you is that new production as everyone on this call knows, only comes from horizontals. Those wells are not treated with treater trucks, which is basically a milk truck for oilfield chemicals accepted costs a quarter million dollars and exports out small volumes in batches. These big horizontals are continuous treatment, very technical each well can be different from each other, never mind formations being different. So they are engineering, heavy. It's not as commoditized as vertical wells. So as the $11 million shifts more to shell and less more verticals us and Champion X and Baker will all benefit. I would say Aaron we're big enough that whatever the ratio is in both countries, I would hazard a guess that within a margin of error of that. We're big enough now in the market that I think we would track that metric.

[Aaron MacNeil, Equity Research Analyst]

Understood. And then, Tony, I got one for you as well. Margins were also pretty strong in the quarter, obviously a function of the wage subsidy to a certain extent. But the other sense of what EBITDA would have been in this quarter, if you had made any changes to the cost structure over the last year and how much of that reduction is permanent versus something you might have to give back in a recovery.

[Anthony Michael Aulicino, Chief Financial Officer]

Well, we run a decentralized model as everybody knows and each of the divisional presidents made decisions on what to do and when to do it on the way down and to be clear and I think we mentioned this during the last call, each divisional presidents have the autonomy to move ridges back when we felt it was appropriate and that's what happened. So by the time we hit the end of last year, much of the salary rollbacks, except for the executives was reinstated and as of January 1 of 2021, all of those salary reductions and were reinstated. And that cost structure that you saw for Q1, that's representative of what we'll see going forward. We did unfortunately have to make some headcount reductions over the year and we're not back to pre-COVID levels by any stretch right now but we invested in the people, we reinstated those salaries and you saw the results. So in terms of answering your question on how that EBITDA could have been different, there wouldn't be a big difference because that comp level is here to stay as we reinstated it and we may have to make some headcount additions, as the guys continue to grow and improve their businesses.

[Operator]

Our next question comes from Matthew Weekes from IA Capital Markets.

[Matthew Weekes, Equity Research Associate]

The first one is just a clarification, did you say earlier in the call that where you are in the U.S. AES drilling fluids market right now that with the recent gains you've made that you are the leader in that market now?

[Thomas J. Simons, President, CEO & Director]

Yes. We believe we're equal with Halliburton's drilling fluid business in terms of size in the market. I'll note that we have zero activity in the Haynesville that isn't to market that we can see a way to make money in and when you combine Canada and the U.S., we're comfortable saying that we're number one on land in North America.

[Matthew Weekes, Equity Research Associate]

Okay. And I'm just wondering, I think the expectation that you had said was that you kind of continue to either maintain or gain more market share going forward. Is it possible as activity recovers, then you see maybe some of the more marginal players coming back in the market that you see a little bit of pressure on the share going forward?

[Thomas J. Simons, President, CEO & Director]

I can't predict what the customers will do, but we didn't get the work in the crash by giving away too much inventory that we got caught holding which has happened to the bigger less nimble companies and somehow even some smaller companies. So through M&A, there might be some choppiness in rig count, but I don't believe we're going to lose work based on performance, which the customers all measure in different ways. And one of the ways for starting to measure is on ESG. So we believe our science first approach, but we don't resell other people's products and run lean safety and have no science people which helps those mom and pops make money and I know how that is because that's how we started this in 2001. Ken and I started this sort of a couple of Red Ford F150s. Those guys were always going to be in the market. They're in the production chemical market all across the U.S. As the customers get bigger to remain competitive for cost of capital as they focus on ESG and reducing their carbon footprint. I think it gets harder for the mom and pops to get what we call body work because you can't hide their deficiencies for management as a drilling person and there is a lot of eyes on the stuff now. It's kind of the focus shifts depending where all the money is getting spent, but we feel comfortable that we can hold our position with our competitors come after it, of course, but we didn't get it, by putting our products on sale. So while we are pushing price increases through our inputs are going up, they're going up for everyone. We're seeing commentary from E&P executives that they know that completion in chemical costs need to go up because the inputs were going up. There are supply chain validate that claim by the supplier before they allow increases to the vendors or suppliers. So I think our chances are pretty good, but there will be a bit of choppiness through M&A, but I don't think we're getting runoff for performance and if people wanted to hire people, because they were cheap, they always had a chance to do that through cohort and we went up, not down.

[Matthew Weekes, Equity Research Associate]

Right. So you're saying it's really more the technical side of things where you're waiting the new work and you haven't made any concessions on price them.

[Thomas J. Simons, President, CEO & Director]

While everyone make concessions a year ago. Anybody in my chair that says they didn't, I don't know how their results are today because they don't have a book of business to try to manage back up, but we think we'll hold it. We don't have a history of spinning the bit and giving back what we win. So absent M&A, we're pretty confident and even with M&A, we work for all of the super majors in North America now. We're ISO certified, we're viewed as a major by the engineers and supply chain, all the sales lines that we offer our customers because we're a basic manufacturer, which in some of our business lines, even the integrated service companies like HAL and [ SLUM ] are not integrated in, so that's why champion X for example beats HAL and SLUM in production chemicals and that's why we beat them in production chemicals. So- and we've taken that advantage and put it into our mud business, which is why we've passed both of those guys.

[Operator]

Our next question comes from Cole Pereira from Stifel.

[Cole J. Pereira, Associate]

Tom, coming back to your comments on U.S. drilling fluid market share. In E&P, I mean, kind of seems like it's fair to say that a lot of this market share capture is and maybe will continue to be driven by some of the private, are you just able to share. This is a function of some of your existing private customers maybe becoming more active or if there is some new customer wins on that side.

[Thomas J. Simons, President, CEO & Director]

There's a good healthy chunk of privates working, but I'll reiterate one of your peers in town pointed out to me at coffee a couple of years ago that we will perceive to mainly be EOG's smart vendor and that we've built a company around that. So we quickly ran the traps in here and inside of our public disclosure is information about the market cap and the percentage of our revenue. We are working for the super majors in the different verticals, we have. So the answer is that the growth has come from privates, but also the biggest public companies in the world.

[Cole J. Pereira, Associate]

Okay, great, that's helpful. I mean obviously revenue is very strong, I mean some of the drilling fluid market share played a role there. But can you maybe just add some color just on sequential pricing dynamics across all your service lines?

[Thomas J. Simons, President, CEO & Director]

Yes. All the customers want to pay less and our inputs are going up, all of our competitors have the identical dynamic. The current champion X or Y with price increases that they tell their customers about through letters and press releases. Our sales people are there with their head in their hand truthfully explaining our imports and where we can give a break on something because of manufacturing, you horse trade some of that. So these relationships of trust are built on transparency and obviously the COVID discount needs to go away for all service companies. We didn't make 13% because everything's on sale. So we're not going to specify who is paying whatever, but we're going to work through the lumpiness of supply chain better than our competitors. I'll remind people what our business really does is we procure commodity chemicals or basic minerals and then we finish them. So we crush minerals, make them into powder and then either pneumatically put them into a drilling operation or put them in through sacks and super sacks. So basically a tot. With chemistry, we buy commodity chemicals, we roll or truck it into Kansas or we bring it in off the coast and the Vancouver Sialco and we react or cook those commodity chemicals into specialty chemicals, then our super smart people in white coats and our field savvy technical people formulate them into finished products. All of that allows us to drop all the margin control our own fate and bring innovation to customers faster than people the resell other people's ideas. Everyone that follows this space knows the first to market with the new product can be a bit of a honey-hole for the service providers and then what happens, the competitors knock it off and because they don't of a track record and the customer doesn't trust them, they have to induce them with low prices. So we're always going to be reinventing ourselves and being basic for making the molecules that allows us to have an advantage. It's why we're neck and neck where Baker and Champion X in this North American market and that's why our mud business has got to be the number one in North America and It makes money, unlike a lot of our competitors.

[Cole J. Pereira, Associate]

Okay. Got it. That's helpful. You did some comments earlier, just about focusing on returning capital to shareholders. I mean as things continue to improve, how do you think about something like re-instituting the dividend and if so how should we think about that.

[Thomas J. Simons, President, CEO & Director]

You should not expect it anytime soon, but we are committed to doing that. We did that for the better part of 15 years, we were turned what $330 million plus to people Tony since IPO. We took this business public without even having an operating line because it generates cash. We have built up $360 million I think of property, plant and equipment, while growing this business, some through M&A, but a lot of it organically. We don't need very much more infrastructure may be the odd expansion for throughput like Nisku which is an indicator that we're predicting we will sell our internal supply chain in the future. We need to get in front of that, but cap -- the sequence will be keep packing away at the share count with cash that we have, we're not going to borrow money from the bank to buy shares. When we refi the bond, we are going to refi a smaller number, we're going to do that by building a war chest over the next period of time. And once those 2 things are complete and we feel confident about the state of the industry, then listeners can expect us to consider returning some money to them.

[Anthony Michael Aulicino, Chief Financial Officer]

And just to add to that briefly, from a financial perspective, ironically, the current environment that Tom laid out and that everybody appreciates where the industry is living within their cash flows and North American producers are very responsible on production and growth levels which means stable production or very modest growth. Those attributes are hugely complementary to the cash flow generating nature of our business, because we are both to do over $1.3 billion of revenue per year like we did in '18 and '19. We are built to optimize working capital use as a use of capital as we demonstrated and we've gotten better at that #1 and #2, if the growth levels have been tempered and I believe they have in North America for sure and perhaps globally [indiscernible] actually all means that we are going to be generating even higher levels of free cash flow and as we continue to pick away the share count, like we did, we bought back about 2.7% of outstanding shares since the beginning of the year as the math gets you to higher free cash flow per share which is paramount for us and that gives Tom and me, our partners and the Board levers to talk about things like a dividend sooner than we felt we would have been able to talk about it at least.

[Thomas J. Simons, President, CEO & Director]

And I'll add something because there is a lot of very smart people that follow the company that are sort of poking me to quit being so conservative. Well, I've been in this chair of taking our private business public. We've had the crash of '08-'09, we've had the crash '15-'16 and the crash of 2020. In all 3 cases, our working capital harvest has allowed us to zero out our bank debt. If we can run this business and largely stay out of our bank line, what do we get to do in the next crash? A lot, so if there is another one, well, I'm still in this chair. We want to have been somewhat conservative as we deploy capital over say the next 12 to 24 months, mindful that 08-09 had nothing to do necessarily with demand of energy even though high oil prices. Probably weren't great for the economy and in 2020, 14 months ago things looked like roses for the industry. So I'm mindful that things that are outside everyone's control in the industry and outside the control of OPEC can bring this industry to its knees. If we can harvest a couple hundred million dollars of working capital and not all the bank any money, we're going to be able to create a lot of permanent value for people on this call. So we're not going to go crazy and try and make everyone happy at once now because we can make the long-term investors in this business, a lot of money if we play this properly.

[Operator]

Our next question comes from Keith MacKey from RBC.

[Keith MacKey, Analyst]

And my first question is just maybe the pace of the rebound in the Production Chemicals division. Just wondering if you can give any kind of color on the breakdown of the of the sales recovery in chemicals for production applications versus frac -- fracturing applications.

[Thomas J. Simons, President, CEO & Director]

In the U.S., Keith, a very modest amount of frac revenue happening in the Permian for us I don't know if we've sold a dollar of that far in the U.S. in the quarter. So it's all specialized products for frac or drilling frac plugs. In Canada, we are getting some traction supplying FR and other chemistries to end users. So there is some EBITDA contribution there and our costs are really a small team of experts, because we've always had the ability to make or procure and then value add the chemistry and deploy it. So if I understand your question right, pretty minimal contribution inside the chemical businesses from frac, but there is upside, we think in Canada and out of our Carlisle facility, we can reach down into the U.S. So there is some chance there, but the FR market is very competitive. Those products, the liquids have a shelf life. We're not interested in investing in working capital that we get left hanging with. So having spoiled inventory, it's one of the challenges for the pumpers. You've got to have lead time on this stuff and what's happened in my opinion is the drillings become more reliable than the completion. If the well is left with the liner, with the right fluid in the hole that prevents stress corrosion cracking from acid, gases that exist in a lot of these formations. So CO2 and H2S which everyone in the industry has learned the hard way. Those wells can be drilled and left for a better day when they can get a proper return for the commodity. So frac, we think will be volatile and choppy, but in certain markets, we're going to participate and make some money, but in Q1, it's not a big factor of how much money we made.

[Keith MacKey, Analyst]

Got it. Okay. And lastly, apologies if I missed this, can you maybe just run through your current job count in the U.S. by basin if you've got that.

[Anthony Michael Aulicino, Chief Financial Officer]

We have 30% of the Permian market. I'm afraid I don't have the breakdown, off the top of my head, but it would be roughly, say 50 of the 86 or 88 jobs running out there, I think of the top of my head. I don't want to guess it, Keith, but it's concentrated in the Permian. It's a decent amount of business in the Northeast U.S. and then there is a little bit of work in the Rockies and a little bit of work in Oklahoma and then we're starting to see some action in South Texas and of course, we've always had a nice book of business in the Eagle Ford.

[Operator]

Our next question comes from Tim Monachello from ATB Capital Markets.

[Tim Monachello]

You put on CapEx here. Over the last 3 quarters, you've spent for $2 million on maintenance CapEx. The guidance for the year is '29. I think that's mostly rolling stock, I'm curious if that's just a conservative number or do you actually expect to get there, Has there been any in our maintenance that's been deferred that you didn't catch up on through the year.

[Thomas J. Simons, President, CEO & Director]

There hasn't been any maintenance whatsoever that's been deferred. That's first and foremost in our CapEx considerations and that will always be the case for higher sell, for safety team, for being able to be our customers with our manufacturing and technology, our rolling stock amount and the number of vehicles has come down and will continue to come down a little bit just because of the nature of the business and some of the contraction in parts of the business, so that maintenance CapEx estimate that we have $20 million that could be a little bit high, but again, we have to watch it through the year.

[Anthony Michael Aulicino, Chief Financial Officer]

And Tim. I'll maybe try and explain one of the new answers to give people comfort around the fact that we didn't neglect maintenance, unlike say a red company or a pumper that's set something in a yard and doesn't maintain it because it's not working. Our trucks are driving around every day. So the maintenance has to be current on them for reliability and safety because our people are in them. So our maintenance hasn't missed a beat. And then the 10 that we've put out for growth that could go towards miscue throughput expansion or other odds and thoughts.

[Tim Monachello]

Okay, great. That's a good segue to the next question here, you mentioned double the capacity in Jacam Catalyst. You guys have done some expansion in Canada and in the U.S. over the last few years. So based on the market share today, you think your business is where do you see -- at what rig content in the U.S., you continue to start spending more material growth CapEx.

[Thomas J. Simons, President, CEO & Director]

The CapEx for drilling, I don't think we are talking about that unless people are tapping the equity market. We ran -- I'll remind people 200 drilling fluid jobs in the U.S. at times in the past and we ran that same job count in Canada before JP got into office in Ottawa, and all of our customers could not access equity or bond capital. So the machine for drilling can handle way more volume. That's why I specified that I think we can go, something scaring double our revenue before real money gets spent in Kansas or in Midland or Grand Prairie to add manufacturing capacity or throughput capacity in these, so manufacturing being reactions or throughput, I'm calling blending in places like Nisku or Grand Prairie or Midland. So unless people are tapping the equity market or are willing to go spend bond debt on drilling, I don't think we're spending money on our drilling fluid business. It is just a business that needs to stay nimble and as Baxter says, make money for the mother ship when it is there to get and to keep your team in place when industry is quiet, so you can live to fight another day. The CapEx would come as revenue gets much higher, which would happen through more production chemical treating, expansion of our frac business, expansion of pipeline treating or possible geographic expansion.

[Tim Monachello]

Okay, that's helpful. The last one here for me. There's been a lot of talk over the last couple of years anyway. It seems to be gaining traction around just digitalization within the energy services space. You have got a lot of companies growing digital platforms that enable customers to procurement online directly with service providers and interact with engineers and provide data. I'm wondering what CES' digitalization strategy. If anything, if that makes sense within the markets that you operate.

[Thomas J. Simons, President, CEO & Director]

It's one of the ways that we've reduced working capital so effectively, we've dropped working capital by over $0.05 of -- over $1 of revenue, since you've been in the chair Tony, 7. That's one of the benefits. Tim. It allows us to better do offset research allowing us to more reliably convince the customer not to over stock drilling locations with contingent products rather than letting the company man, we're a member. Well, we drilled 20 years ago that took loss circulation, but not remembering the surplus casing now get set 200 meters deeper. So AI has always been part of our strategy to get work improve our financial metrics. I think and I'll just say at GE [indiscernible] when they bought Baker thinking that sensors could replace all the people in the field. That to me was almost insulting to industry, I believe, energy and health care use technology more than any other industries in the world. We're drilling holes in the ground, 2 to 5 miles deep and then turning them sideways for a couple of miles knowing exactly where the pipe and beat are and then poking holes in the pipe, shattering rock with water and sand and keeping it open and extracting oil and gas that it looks to me, people in the Eastern U.S. and Central Canada just realize they can't live without and so to me the industries always had digitization, it's become a bit of a buzzword, we are not looking to displace our field workers with sensors. There are point of contact with our customers. They are expected to know the business as well as the customer and in most cases, better for what we specifically do and it's one of our competitive advantages, but it's certainly is allowed us to actually create financial value for shareholders by lowering working capital and that's part of why we're up in market share in all our segments, because we're using it effectively. We're just not out pounding our chest, because our experience and why I don't talk about specific products anymore is our competitors steal the idea and then do it for less.

[Operator]

[Operator Instructions] This concludes the question-and-answer session. I would like to turn the conference back over to Tom Simons for any closing remarks.

[Thomas J. Simons, President, CEO & Director]

Thank you. In summary, our focus remains to hold and build upon the successes we created through 2020 and into Q1 '21. We will watch working capital closely, we'll be prudent with CapEx, we will solve our customers' problems better than our competition, we will maintain our decentralized approach, we'll navigate supply chain issues facing the entire industry better than most because we saw supply, we'll continue our march towards a lower share count, a smaller bond upon refi and in time a renewed return of cash to equity holders. I want to thank our employees and customers. We're excited for 2021. That ends today's call.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.